Snapchat, a mobile messaging application used to share photos and videos with friends, has just experienced its first user count decline since its launch in 2011. However, it may seem as though the stories war has killed Snapchat’s growth with a decline of 3 million daily active users to 118 million.
Despite its user count shrinkage, the revenue improvement of 44% and reduced losses has led Wall Street to give Snap’s shares an immediate 11% pop in after-hours trading. While dodging numerous questions on how they planned to improve revenue when its optimised Android app would arrive, its shares fell back to just below the day’s closing price of $13.12.
Recording its slowest user growth rate ever that led to a 24% plunge in its share price in May, the app seems to be coming off disastrous Q1 earnings. However, the company has been very eruptive with a 37% growth in its share price after a surprising positive Q4 2017 earnings.
Snapchat’s CFO Tim Stone during the earnings call stated that the company is interested in monetizing all part of the app even its “communication”. However, this could indicate more ads in the inbox beyond the sponsored lenses users can play with in to send augmented reality Snaps to friends.
Snapchat is also hoping for a climb in ad prices and revenue after a decline in ad prices as it moved to self-serve auctions.
On a brighter side, Snapchat grew its average revenue per user in the rest of the world region by 65% in just this quarter to reach $0.96. It also revealed that it is still working to re-engineer its Android app to boost performance and reduce churn since that’s how it gets its new users.